A.M. Best Assigns Debt Rating to Cincinnati Financial Corporation's New Senior Notes.OLDWICK, N.J. -- A.M. Best Co. has assigned a debt rating of "aa-" to $375 million 6.125% 30-year senior unsecured notes of Cincinnati Financial Cincinnati Financial Corporation (NASDAQ: CINF) offers property and casualty insurance, its main business, through The Cincinnati Insurance Company, The Cincinnati Indemnity Company and The Cincinnati Casualty Company. Corporation (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CINF CINF Community Imagery Needs Forecast (US Federal government) CINF Conservation Survey Record Information ) (Fairfield, OH). Additionally, A.M. Best has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the rating on the company's existing debt securities. The financial strength ratings on Cincinnati Financial's property/casualty and life/health insurance subsidiaries are unaffected. All ratings have a stable outlook. The company intends to utilize the proceeds of the offering to retire $58 million of notes payable under an existing line of credit, redeem redeem v. to buy back, as when an owner who had mortgaged his/her real property pays off the debt. The term also refers to paying the amount due and all charges after a foreclosure (due to failure to make payments when due) has begun. outstanding intercompany debt of $128 million to The Cincinnati Insurance Company and use approximately $100 million to finance the construction of a parking garage and office building. The remaining proceeds will be used for general corporate purposes. After the transaction, Cincinnati Financial Corporation's prospective debt to capital ratio should approximate 11.5% which is within the acceptable range for the current rating. The financial strength rating of the property/casualty operations reflects its superior risk-based capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. , strong operating performance and the group's successful business profile within its targeted regional market platform. The group retains a distinct distribution advantage through its network of independent agents fostered through strong, long-term relationships, which are strengthened by its field support, market stability, competitive commission structure and portfolio of insurance products. As of September 30, 2004, the group's strong operating performance continued, driven primarily by the group's core solid property and casualty underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. results that reported a 91.4% statutory combined ratio through nine months of operations. Additionally, the group has annually reported favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. loss reserve development and appears to be reserving current accident years more conservatively, which lends considerable stability to the organization. Somewhat offsetting these strengths are the group's high common stock leverage and concentration risk within its investment holdings and the annual payout pay·out n. 1. The act or an instance of paying out. 2. A percentage of corporate earnings that is paid as dividends to shareholders. of stockholder dividends. These factors, along with codification The collection and systematic arrangement, usually by subject, of the laws of a state or country, or the statutory provisions, rules, and regulations that govern a specific area or subject of law or practice. , have affected surplus generation in some years. Somewhat mitigating these risks are the group's conservative underwriting leverage, solid liquidity and cash flows as well as the financial flexibility of its parent company. Further, the group experienced a marked increase in statutory surplus during the third quarter due to the transfer of investment securities from its parent with a market value of $1.60 billion on August 26, 2004. The rating of the life/health operation reflects its strategic position within the organization, its expanding geographical presence and positive statutory operating performance. Partially offsetting these factors are the life company's elevated exposure to common stocks and its impact on net income and asset valuation reserve, lower operating profitability and surplus strain due to acquisition costs of writing increased amounts of new business. The following debt rating has been assigned with a stable outlook: Cincinnati Financial Corporation - --"aa-" on $375 million 6.125% senior unsecured notes, due 2034 The following debt rating has been affirmed with a stable outlook: Cincinnati Financial Corporation - --"aa-" on $420 million 6.9% senior unsecured debentures, due 2028 For a list of A.M. Best's debt ratings, please visit http://www.ambest.com/debt. For current Best's ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , independent data and analysis on more than 3,000 individual property/casualty companies, groups and industry composites, please visit http://www.ambest.com/pc. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com. |
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